Tax Audit
The provisions relating to tax audit are provided under Section 44AB of the Income Tax Act. According to Section 44AB, a tax audit is required for the following persons:
Business
In case of a business, tax audit would be required if the total sales turnover or gross receipts in the business exceeds Rs.1 crore in any previous year. Under the Income Tax Act, “Business” simply means any economic activity carried on for earning profits. Section 2(3) has defined the business as “any trade, commerce, manufacturing activity or any adventure or concern in the nature of trade, commerce and manufacture”.
Profession
In case of a profession or professional, tax audit would be required if gross receipts in the profession exceed Rs.50 lakhs during the financial year. A profession or professional could be any of the following as per Rule 6F of the Income Tax Rules, 1962:
Architect
Accountant
Authorised representative
Engineer
Film Artist – Actor, Cameraman, Director, Music Director, Editor, and so on
Interior Decorator
Legal Professional – Advocate or Lawyer
Medical Professional – Doctor, Physiotherapist, or Nursing and Paramedical Staff
Technical Consultant
Presumptive Taxation Scheme
If a person is enrolled under the presumptive taxation scheme under section 44AD and total sales or turnover is more than Rs. 2 crores, then tax audit would be required. Also, any person enrolled under the presumptive taxation scheme who claims that the profits of the business are lower than the profits calculated in accordance with the presumptive taxation scheme would be required to obtain a tax audit report.
Due Date for Filing Tax Audit Report
The due date for completing and filing tax audit report under section 44AB of Income Tax Act is 30th September of the assessment year. Hence, if a taxpayer is required to obtain a tax audit, then the assessee would be required to file the income tax return on or before 30th September along with the tax audit report. In case the taxpayer is also liable for transfer pricing audit, then the due date for filing tax audit is 30th November of the assessment year.
Form 3CA & 3CD
Any person who is required to get a tax audit would be required to furnish the following for tax audit while filing an income tax return:
Form 3CA – Audit Form
Form 3CD – Statement showing relevant particulars
Penalty for Completing Tax Audit
If a taxpayer who is required to obtain tax audit does not get the accounts audited, then penalty could be levied under Section 271B of the Income Tax Act. The penalty for not completing tax audit is 0.5% of the turnover or gross receipts, subject to a maximum of Rs.1,50,000.
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